The Canadian company that intends to take over Ascendant Group sees an opportunity in Bermuda to replace fossil fuel energy generation with renewables, as it is doing elsewhere.
That was among the comments made by Ian Robertson, chief executive officer of Algonquin Power & Utilities Corporation during a second-quarter earnings conference call on Friday.
He spoke a few hours after Ascendant Group shareholders met and voted overwhelmingly to accept Algonquin’s $365 million offer for the group, which includes energy provider Belco.
The amalgamation transaction is expected to close later this year, subject to the granting of regulatory approvals.
Algonquin has reported adjusted net earnings of $55 million for the second quarter, or 11 cents per share, up from $50.9 million for the same period in 2018. Revenue fell six per cent, year-on-year, to $343.6 million.
During Friday’s conference call, Mr Robertson responded to a question about the Ascendant transaction and said that while Belco is “a great utility in a highly stable and fairly well-off socioeconomic service territory, what really enthused us about it is the fact that, believe it or not, that the utility supplies almost 100 per cent of its energy from fossil fuel resources.”
He said there are two consequences of that.
“Obviously, I don’t think Bermuda is achieving its objectives from an ESG [environment, social and governance] perspective. And second of all, maybe where the real opportunity comes in, energy is very expensive in Bermuda, like 40 cents a kilowatt-hour with almost 20 cents of that being attributed to fuel,” he said.
Mr Robertson said the company sees an opportunity to do in Bermuda what it is doing in the US Midwest in terms of replacing fossil fuel energy generation with renewables.
He added: “And gosh, when you’re paying 20 cents for the energy alone — there’s a value proposition there.”
He also mentioned the Regulatory Authority’s preference for renewable energy projects, as laid out in its Integrated Resource Plan, published last month.
Mr Robertson said: “You can imagine that was the underpinning of our interest in Bermuda and music to our ears. From our perspective it has advanced the timing of our expectations of continued investment to replace fossil with renewables. So I think it’s great news.”
Regarding debt within Belco, Mr Robertson said it is a “relatively low levered utility”.